2021 (9) TMI 489 - AT - Income Tax

Levy of late filing fee u/s 234E - demand u/s 200A - diversified views - HELD THAT - In the absence of the judgement of Hon ble jurisdictional High Court , we are of the view that the decision, most favourable to the assessee required to be adopted as held by the Hon ble Apex Court in the case of M/s Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT . The Hon ble Karnataka High Court in the case of Sree Ayyappa Educational Charitable Trust 2018 (1) TMI 90 - KARNATAKA HIGH COURT and Fatheraj Singhvi Ors. 2016 (9) TMI 964 - KARNATAKA HIGH COURT held that unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect, and accordingly decided the issue in favour of the assessee. Thus we hold that the late fee levied is unsustainable, accordingly we set aside the orders of the lower authorities and delete the late fee levied by the AO. - Decided in favour of assessee.

Summary

Issues involved:
Levy of late filing fee u/s 234E of the Income Tax Act, retrospective effect of section 200A(1)(c), conflicting decisions of High Courts, applicability of late fee prior to 01.06.2015.

Analysis:
1. Levy of late filing fee u/s 234E:
The appeals were filed by the assessee against the orders of the CIT(A) related to the levy of late filing fee u/s 234E of the Income Tax Act. The AO had raised demands for late filing fees for different quarters, and the CIT(A) confirmed the order, citing a decision of the Hon'ble Gujarat High Court. The issue primarily revolved around the retrospective application of section 200A(1)(c) and the chargeability of late fees prior to 01.06.2015.

2. Retrospective effect of section 200A(1)(c):
The Ld.AR argued that statutory provisions should be read with prospective effect unless expressly provided otherwise. Citing the decision of the Hon'ble Karnataka High Court, it was contended that no computation of fee for TDS deducted before 01.06.2015 could be made. The Ld.AR also highlighted the principle of adopting the decision most favorable to the assessee in case of divergent High Court rulings, as per the Hon'ble Supreme Court's precedent.

3. Conflicting decisions of High Courts:
The Tribunal noted conflicting decisions of High Courts on the issue. While the Hon'ble Gujarat High Court upheld the revenue's competence to collect the fee retrospectively, the Hon'ble Karnataka High Court held that provisions should be read with prospective effect unless expressly provided otherwise. With no decision by the jurisdictional High Court, the Tribunal leaned towards the view favoring the assessee, following the principle established by the Hon'ble Supreme Court.

4. Applicability of late fee prior to 01.06.2015:
Citing the judgment of the Hon'ble Karnataka High Court in a similar case, the Tribunal held that the late fee levied was unsustainable and set aside the orders of the lower authorities. The Tribunal concluded that the demand notices for late fees under Section 200A prior to 01.06.2015 were without legal authority and hence quashed. Consequently, the late fees levied by the AO were deleted, and the appeals of the assessee were allowed.

In conclusion, the Tribunal's decision was based on the interpretation of statutory provisions, retrospective versus prospective effect, and the application of principles favoring the assessee in case of conflicting High Court decisions. The judgment provided clarity on the levy of late fees u/s 234E and highlighted the importance of legal principles in tax matters.